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Almost 57 per cent of the Italian vote went to parties that have vowed to tear up the EU austerity script. Together they control a majority of senate seats.

The Five Star movement of comedian Beppe Grillo, which won 25 per cent of the vote, has called for a euro referendum and has a return to the lira as one of its manifesto pledges, while ex-premier Silvio Berlusconi has threatened to pull Italy out of the currency bloc unless the EU switches to a reflation strategy.

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Even if the centre-left leader, Pier Luigi Bersani, can put together a ‘‘grand coalition’’ with Mr Berlusconi, there is no going back to the hairshirt regime imposed by Mario Monti’s technocrat government at the EU’s behest over the past 15 months.

‘‘A deal with Monti is impossible,’’ said Mr Berlusconi yesterday. ‘‘His austerity policies have put the country into a dangerous recessionary spiral, with rising debt and unemployment, and the closure of a thousand firms a day.’’

The great fear is that the European Central Bank (ECB) will find it impossible to prop up the Italian bond market under its Outright Monetary Transactions (OMT) scheme if there is no coalition in Rome willing or able to comply with the tough conditions imposed by the EU at Berlin’s behest. Europe’s rescue strategy could start to unravel.

Andrew Roberts, credit chief at RBS, said: ‘‘What has happened in these elections is of seismic importance.

‘‘The ECB rescue depends on countries doing what they are told. That has now been torn asunder by domestic politics in Italy. ‘‘The big risk is that markets will start to doubt the credibility of the ECB’s pledge.’’

It is a widely shared view. Luigi Speranza, from BNP Paribas, said: ‘‘We fear the markets could lose faith in the OMT’s effectiveness.’’

Italy is big enough to bring down the eurozone if mishandled.

Bond buying under the OMT can begin only after countries in trouble request a rescue from the EU’s bail-out fund under strict terms.

This then requires a vote in the Bundestag.Germany’s ECB board member, Jorg Asmussen, backed the plan when it was unveiled in August, signalling the crucial acquiescence of Chancellor Angela Merkel. The concern is that Germany could withdraw that assent if provoked.

Mr Roberts said: ‘‘The big unknown is how much Germany is going to buckle over the next six months. German leaders want to keep up the appearance that the eurozone crisis has been solved, at least until their elections in September.’’

In one sense, Italy is in a weak bargaining position. It must raise 420 billion euros this year, making it acutely sensitive to the latest surge in borrowing costs. Yields on 10-year bonds surged 34 basis points yesterday, pushing the spread over German Bunds to 330, with traders eyeing the 400 level where stress begins in earnest. Italian bank shares tumbled in Milan, with Intesa Sanpaulo down 8.4 per cent on fears of losses on sovereign bonds.

Yet Italy is big enough to bring down the eurozone if mishandled. It is also the one Club Med country with enough fundamental strengths to leave EMU and devalue, if it concludes that would be the least painful way to restore 35 per cent of lost competitiveness against Germany since the launch of the euro.

It has low private debt and euros 9 trillion of private wealth. Its total debt level is 265 per cent of GDP, lower than in France, Holland, the UK, the US or Japan.

Its budget is near primary balance, and so is its International Investment Position, in contrast to Spain and Portugal. It could in theory return to the lira without facing a funding crisis, and this may be the only way to avoid a crisis if the ECB withdraws support. Any attempt to force Italy to knuckle down risks backfiring disastrously for EMU creditors.

The question is whether the election will prompt a radical rethink in Brussels and Berlin. Martin Schulz, the European Parliament’s president, said the vote had shown the intellectual bankruptcy of current EU policies.

‘‘People will make sacrifices, but not at any cost,’’ he said.

Defenders of the Monti policy say in retrospect that it was an error to push fiscal tightening of 3 per cent of GDP last year when Italy was already in depression - and did not have a deficit crisis - and neglect the greater task of marshalling public support behind reforms.Critics are harsher.

Nobel economist Paul Krugman said the EU policies imposed on Italy and others has been ‘‘a disastrous failure’’. If there is no change in strategy, this election will be ‘‘just the foretaste of the dangerous radicalisation to come’’.